Innkeepers USA Trust and its affiliates ('Innkeepers') today announced that they have filed a complaint with U.S. Bankruptcy Court for the Southern District of New York against Cerberus Series Four Holdings, LLC, Chatham Lodging Trust and other related defendants for breach of contract and other claims for reneging on their commitment to acquire 64 hotels from Innkeepers.
Cerberus and Chatham entered into a binding commitment letter on May 16, 2011 to acquire the properties for $1.12 billion as part of Innkeeper's Chapter 11 plan of reorganization. However, Cerberus and Chatham purported to terminate the agreement on August 19, 2011 without explanation other than to generally reference the material adverse event language in the binding commitment letter.
The 'defendants purport to terminate their binding and irrevocable commitment based on an unidentified and unexplained ?material adverse effect,'' according to Innkeepers' complaint, 'but no such material adverse effect has occurred. Cerberus' and Chatham's failure to provide any evidence of a material adverse effect is not surprising because the Debtors' (Innkeepers') business remains strong and on course.'
Moreover, the binding commitment letter contains no 'market' material adverse event clause, according to the complaint.
The complaint further states: 'Cerberus' and Chatham's purported termination is nothing more than a calculated effort to apply leverage upon the Debtors and their constituents to renegotiate the terms of the parties' binding contract. Regardless of their motives, one thing is clear: Cerberus and Chatham are not excused from their obligations under the plain terms of the Binding Commitment Letter and Term Sheet.'
'We remain pleased with the operating performance of our properties,' said Innkeepers' Chief Restructuring Officer, Marc A. Beilinson. 'That's why we expect to once again see substantial interest in the 64 hotels that Cerberus and Chatham failed to purchase, in the event Cerberus and Chatham fail to live up to their contractual obligations.'
Innkeepers is seeking an order requiring Cerberus and Chatham Lodging Trust to perform their obligations under the binding commitment letter or pay substantial damages in an amount determined at trial for the defendants' improper termination of their binding and irrevocable commitment to purchase 64 of Innkeepers' hotels. The damages could exceed their $20 million deposit, which is being held in escrow.
Copies of Innkeepers' complaint and other court documents are available at http://www.omnimgt.com/innkeepers/.
About Innkeepers USA Trust
Innkeepers USA Trust is a real estate investment trust and a leading owner of upscale extended-stay hotel properties throughout the United States. The company currently owns interests in 64 hotels with approximately 8,400 rooms in 18 states.
